When the Berlin Wall came down in 1989, it was not simply the Soviet Union or the
"communist idea" or the efficacy of Marxist solutions that collapsed. Western
European social democracy, too, was severely dented. In the face of a triumphalist
capitalist storm that swept the world it, too, had to trim its sails. The fact that,
barring Spain, social democratic parties or coalitions govern most of Western Europe today
is of interest largely because of the collective experience it provides: these parties can
no longer deliver effective policies that improve the conditions of the majority of
electors whose votes have placed them in power. Capitalism, unchallenged from any quarter,
no longer feels the need to protect its left flank by conceding reforms. Under these
conditions, social democracy finds it difficult to protect the underprivileged. All it can
offer its respective electorates is either fear (vote for us because it will be very much
worse under the Right) or vacuous ideological formulae, whose principal function is to
conceal the poverty of any real progressive ideas: "third way,"
"conflict-free politics," "beyond left and right." The net result is
either an electoral shift towards far-right demagogy (of which Austria is the most recent
European example) or an increasing alienation from politics and from the entire democratic
process. In other words, an increasing Americanization of European politics. With popular
culture so heavily Atlanticized, can politics be far behind?

Perhaps the European Union (EU) will fight back to preserve certain values in both the
cultural and politico-economic spheres. There is a great deal of tension behind the
scenes, but Washington is in a confident mood. It is determined to break the weak and
watered-down alternatives offered by the Franco-German axis by promoting the English
disease. For nowhere in Western Europe has a social democratic party capitulated so
willingly and completely to the needs of a deregulated capitalism as in Britain.

This is not simply the result of 1989. The Labour Party under Tony Blair (or "New
Labour," in their own debased coinage) is, in many ways, the most significant success
of the Eighties counterrevolution. Margaret Thatcher crushed the trade unions, demoralized
the Labour Party, and used the media to promote the message that no alternative was
possible. Blair's Labour Party is the product of this defeat. Political differences have
been reduced to which party has the better advertising company, and whether New Labour or
Tories are more responsive to market research. It is hardly surprising that this process
produces mediocre politicians and reduces politics itself to pure kitsch. A classic
example of this was Tony Blair's recent response to his wife's pregnancy. "Producing
a baby," he declared, "is much more important than winning a general
election."

This is the reality that separates continental Europe from contemporary Britain. The
workers movement and its political parties in Germany, France, and Italy have not (so far)
been crushed by local equivalents of Reagan or Thatcher. Jospin's victory in France
angered the Blair circle, both because the French leader appeared to believe in some form
of social democracy, but also because his very presence rebutted the idea that only
telegenic, fashion-conscious politicians could win elections. The notion that the
politician was a product on offer to the consumer-electorate was certainly not the case in
France.

After the turbulence of the Sixties and Seventies, the U.S. bourgeoisie, to use an
old-fashioned word, was determined to roll back the political and social advances of the
preceding decades. With a new Republican President established in the White House and a
new, eager, reactionary Conservative Prime Minister in No. 10 Downing Street, the time had
come for a widespread shift to the right, which would enable capital to brand itself on
the remaining decades of this century. Forty years after the rise of a carefully
constructed Keynesian model, which had governed class relations in North America and
Western Europe, it was decided that the time had come to demolish the old edifice. It had
served its purpose. Gradually, a new Anglo-American model emergedneoliberalism.

This was a vision of global capitalist supremacy, determined to let nothing obstruct
the flow of profits. This new turn was symbolized by two Western politicians: Ronald
Reagan and Margaret Thatcher, neither of whom were taken very seriously when they first
came to power. The new economic regime promoted by Reagan and Thatcher had a tough
political agenda. This was defined by the dismantling of welfare rights, the disabling of
trades unions via legislation and repression (the miners in Britain, the air-traffic
controllers in the United States), the deployment of military force abroad, and the
redistribution of income away from the poorest to the most prosperous layers in society.
20.2 million households, earning under ten thousand dollars, lost an average of four
hundred dollars each in benefit cuts, while 1.4 million wealthy families, earning an
average of more than eighty thousand dollars, received an average of 8400 dollars in tax
cuts.

During Reagan's first term in office, low-income families lost twenty-three billion
dollars in revenue and Federal benefits, while high-income families gained over
thirty-five billion dollars. This explained the massive endorsement of Reagan in the
prosperous suburbs and the sunbelt. In Britain, too, individual greed was encouraged by
the lowering of taxes and the sale of council houses and other state assets. "There
is no such thing as society," proclaimed Margaret Thatcher as she followed suit with
the promotion of a get-rich-quick culture that catered to the cupidity and narcissism of
the individual, thus consciously creating a social environment in which the needs of the
underprivileged could be safely ignored. Financial deregulation stimulated the formation
of a class of nouveau entrepreneurs, who thought little of safety regulations or
trade-union rights for their employees.

A hallucinatory euphoria, aided and abetted by a sycophantic news establishment, helped
to cement the new consensus. A full-scale ideological assault was mounted on the old
post-war settlement. Overnight, Keynesianism became a dirty word. A new social, political,
economic, and cultural consensus was born. It was ugly. It was brutal. It appeared to
work. It had to be made hegemonic.

Those in the TV networks, who resisted being "one of us" were unceremoniously
removed. With the help of Rupert Murdoch and others, a culture of conformity began to take
shape. The situation was summed up brilliantly by an internationalist banner carried by
striking South Korean workers during a general strike in the late Eighties, outside a
Japanese transnational with big business interests in Britain. It read: "You Can't
Defeat Us. We're Not English!" In Britain, a significant number of Blair's apparatchiks
are former contributors to Marxism Today, once the theoretical journal of the
British Communist Party (now defunct). Its editors were heavily influenced by the Italian
Communist Party (PCI). Marxism Today made its own historic compromise. It decided
to dump virtually every socialist principle and accommodated shamelessly to free-market
ideology, consumerism of the basest sort, "postmodern" life-styles, and the
"end of ideology." While the senior statesmen of Marxism Today, Eric
Hobsbawm and Stuart Hall, preserved a certain distance from all this, they were unable to
stop the slide.

Tony Blair's victory as leader of the Labour Party was not pre-ordained. It was the
result of John Smith's untimely death. Ideologically, Smith was a staunch European social
democrat, not unlike Jospin, but without a Trotskyist hinterland. Blair modeled himself as
the English Clinton.

Bill Clinton, seared by the experience of Reaganism, shifted the U.S. Democrats to the
Right, abandoning any pretense of a New Deal and, in the name of the New Democrats, won
the Presidential election. Blair now sought to mimic this success. The scale of Labour's
electoral victory in the May 1997 general election surprised its leaders. They had fought
a banal campaign, strong on presentation, weak on politics. It stressed continuity with
the old regime rather than any serious change. Blair's presidential demeanor smacked of
Bonapartism. His image was used to reassure voters that he was not too different from the
Tories who had governed Britain since 1979, and that he would be a friend of big business.
It was publicly stated by Blair and his spin doctors that the trade unions would be kept
at arm's length. It was also widely hinted that Blair and his group would like to detach
the Labour Party from the trade unions altogether. A modern, democratic party had no time
for old-fashioned conflicts. Ideally, Blair wanted a coalition government with the Liberal
Democrats to lay the basis for a new Centre Party that could dominate politics for the
next fifty years. At least that was the desire, but the electoral majority made any such
wish a utopia.

At a lunch for big business at the Savoy Hotel in London on May 13, 1996, Peter
Mandelson, a close ally of Blair, stated that he favored "healthy profits" for
companies and was not unduly bothered by the fact that this would "inevitably lead to
inequalities in incomes." This was an open pledge to the effect that Britain would
always be safe for foreign investors. The domination of the British economy by
transnationals is five times greater than the rest of Western Europe and three times that
of the United States. After two years of Blair, the gap between executive salaries and the
average wage is the largest in Europe. Blair's ideologues were so convinced that victory
had only been won because they had ditched a traditional social-democratic program that
they ignored the reality of Britain under the Conservatives. The Blair people did not want
to believe that the electorate wanted to punish their predecessors for big crimes rather
than misdemeanors, and that they really had voted for a change. The decline in education,
in the health service, the sale of the railways, and water had never been popular. The
sale of public housing to those living in it was a key plank in Thatcherite policies. New
Labour had decided it was popular and promised to leave it unchanged.

But by early 1996, the mood had begun to shift. Individual greed was beginning to turn
to anger as people realized that they had been cheated and nothing was being done to
alleviate their suffering. New Labour enthusiasts do not like to be reminded that between
1990 and 1996, a million people lost their homes through repossession by the mortgage
companies. 390,000 homes, once publicly owned, were seized by the companies. Another one
million properties were estimated in the same year to be suffering from "negative
equity:" the homeowners had paid too much for them in the first instance and could
not get their money back.

Thatcher had decided to make Britain a nation of small businesses. This was the much
vaunted "popular capitalism." By 1997, the year of Labour's victory, personal
bankruptcies had "stabilized" at twenty-two thousand a year, and thirty thousand
companies became insolvent between 1990 and 1997. The "flexible labor market" so
beloved by Thatcher, Blair, and the transnationals had, in reality, made unemployment a
mainstream experience. In December 1997, it was estimated that one in five men and one in
eight women had suffered at least one extended spell of joblessness in their adult lives.
It is this insecurity that modern capitalism, which lives for the short-term, values so
greatly. Blair is the battering ram which capital wants to use to break down the remaining
pockets of resistance in Europe. The EU should beware the English carrying gifts. For what
they offer is the U.S. model, and this model is not the success that its supporters claim.
The figures speak for themselves.

If one studies the actual performance of the U.S. economy, one sees that the model to
which Blair aspires has been little short of disastrous. If we accept that productivity
growthoutput per houris the most useful single indicator to determine economic
health and the key to increased wealth and a growth in wages, then the situation is bleak.
Over the last twenty-five years, productivity has grown less than half of its average rate
of increase during the entire previous century. It is a little over 1 percent a year,
compared to 2.2 percent between 1890 and 1973. This means that the output available to
distribute to workersassuming that the distribution didn't changegrew half as
fast as before.

On the level of wages, the picture is much worse. The distribution of income between
rich and poor has deteriorated sharply. Since 1973, there has been a total stagnation of
wages. Real wages have been flat for the last quarter of a century. Today they are at
approximately the same level that they were in 1968. This shows that wages grew at an
average annual rate of at least 2 percent (often faster) during every single decade
between 1890 and 1970, with no exceptions. This includes the decade of depressionthe
1930s.

Nothing has changed under Clinton. In 1998, the wages of the bottom 80 percent of the
labor force were lower than they had been in 1989, and significantly lower than in 1979.
Simultaneously, the United States has been the only major capitalist country where workers
have actually had to increase the average number of years they work each year, and that
number has grown above two thousand hours per year. This means that U.S. workers labor
more each year than the workers of any other Western country. They work 10 to 20 percent
more than Western European workers. Even the Japanese, usually top of the chart in terms
of working hours, have sharply reduced this during the 1990s and are now working less on
average than North Americans. Inequality, too, has increased, and continues to do so
throughout the 1990s.

The ratio of executive pay to workers' wages was 42:1 in 1980; by 1990, it had doubled
to 85:1 and by 1997, it had quadrupled to 326:1. In 1980, the richest 1 percent of the
population owned 20.5 percent of the wealth. This rose to 31.9 percent in 1989 and had
reached 40.1 percent in 1997. The value of stocks tripled in real terms between 1990 and
1998. This extraordinary leap benefited those who were already rich. The top 1 percent
netted 42.5 percent and the richest 10 percent netted 85.8 percent, leaving the bottom 80
percent with peanuts. This is the famous trickle-down economics of neoliberal fantasists.
When we are told the U.S. economy is working well, this is true, but only for the
well-off. In the United States, 25 percent of all children live in poverty. This number is
double that of any other advanced capitalist economy, except oneBritain. In terms of
elderly poverty, the United States is 20 percent, but in this field, at least, it has been
overtaken by its British followers; in England, 24 percent of old people now live in
poverty.

Under these conditions, the cold-blooded decision taken by New Labour's leaders and
thinkers, to discard the very concepts of equality and social justice and turn their backs
on redistributive policies, marks a sharp break with traditional social democracy. Harold
Wilson, Richard Crossman, Antony Crosland, and Barbara Castle, not to mention Clement
Attlee and Herbert Morrison, appear as "loony lefties" for insisting that the
state had an important role to play in regulating capitalism.

The first three decisions made by New Labour were highly symbolic, designed to show the
City of London that this was not an old-style Labour regime. They had made their peace
with free-market values, and no reformist nonsense would be tolerated. It was decided to
detach the Bank of England from government control and give it full authority to determine
monetary policy.

A second determining act in office was to cut eleven pounds a week in welfare benefits
to single mothers. The savings for the state were minimal. The aim was ideological:
contempt for the "weaknesses" of the old welfare state and an assertion of
"family values." Unlike Clinton, his British disciple is a genuine Christian
enthusiast!

The third measure was to charge tuition fees to all university students. This was a
proposal that had been rejected more than once by the preceding Conservative government on
the grounds that it was unfair and would discriminate against students from poor families.
New Labour apologists were quick to point out that students in real need would not be
charged, but the overall effect has been to discourage working-class children from
achieving a higher education. The culture of New Labour is, essentially, not simply to
maintain the status quo but to defend it as an achievement of the free market and insist
that there is no conflict between corporate interests and those of working people.
Overnight people, like former Deputy Leader of the Labour Party, Roy Hattersley, a
right-wing social democrat at the best of times, began to sound very radical; all he was
doing in his regular Guardian column was reiterating traditional Labour commitments
to a moderate degree of social justice.

One of the last big measures of the preceding Conservative government had been to
privatize the railways, despite the fact that only 15 percent of the population supported
such a measure. At the 1993 Labour Party Conference, John Prescott, now Deputy Prime
Minister and in charge of transport, told delegates: "Let me make it crystal clear
that any privatisation of the railway system that does take place will, on the arrival of
a Labour Government, be quickly and effectively dealt with ... and be returned to public
ownership."

A year later, at the 1994 Labour Party Conference, Frank Dobson pledged on behalf of
the leadership: "Let me give this pledge not just to this Conference but to the
people of Britain. The next Labour Government will bring the railway system back into
public ownership." By 1996, with Blair firmly in control, the crystal clearness had
vanished completely. Instead, New Labour pledged to create "a modern integrated
transport system, built in partnership between public and private finance." On July
23, 1999, The Economist, a staunchly pro-capitalist weekly, published an article
headed, "The Rail Billionaires" and sub-headed: "The privatisation of
British Rail has proved a disastrous failure. Without big changes, things are going to get
worse." The magazine provided an example: "Indeed, until last year, some of
Railtrack's suppliers decided, in effect, which parts of the track needed renewal.
Naturally, they appeared concerned less with passenger safety than with their own profits.
Because they are paid by the mile, they have understandably tended to choose sections that
are easy to renew rather than those that involve the most work." In October 1999,
there was a rail crash at Paddington Station, in which dozens of people lost their lives.
John Prescott, the Deputy Prime Minister, immediately went on television to say the crash
had nothing to do with privatization. He looked shifty and uneasy as he was mouthing New
Labour platitudes. In truth, the group of directors earning a fortune in dividends had
decided that seven hundred million pounds was too much to invest in ATP, the safety system
that would have prevented the Paddington crash. The public was outraged. Every opinion
poll showed a large majority of citizens (varying between 65 and 85 percent) in favor of
renationalizing the railways. New Labour, normally very keen on focus groups and other
slightly bogus marketing techniques, was not prepared to listen to the people. In March
1998, a year and a half before the accident, John Prescott had stated: "The
privatised railway is producing windfall profits for a few people as a result of the
contracts awarded by the last Government. There is nothing I can do about that."

Nothing? Rarely has a senior Cabinet Minister admitted the impotence of his government
so clearly. The fact is, of course, that with massive public support, the government could
issue public bonds to raise the money to take the railways back from the billionaires.
Such a move, however, would breach New Labour's contract with big business: we create the
conditions for you to make the money. This approach is now being taken in state education
and the National Health Service, where the Private Finance Initiative will de facto
deliver hospitals to profit-making companies in return for private capital. Already a
number of schools have been selected for sale to private education companies.

The one area in which New Labour found it difficult to renege on pledges made while in
Opposition was devolution. It was the single issue which would have brought out all the
simmering tensions and hatreds within the Labour Party. The referendums in Scotland and
Wales were duly held, and the citizens of these two regions voted to set up their own
Parliament (in Scotland) and Assembly (in Wales). The Scottish National Party (SNP) and
Plaid Cymru provided the main opposition to New Labour, and both the nationalist parties
were to the left of New Labour on issues of both domestic and foreign policy. In both
elections, New Labour won, but by very small margins.

In Scotland, many former Labour voters deserted to the Nationalists. The pattern in
Wales was the same. Neither of the two nationalist parties waged an anti-English campaign.
Both stressed the importance of Europe and a progressive social policy. The presence of
these two parties has partially solved the problem of a social-democratic opposition to
the political economy of New Labour. No similar alternative exists in England. A change in
the electoral system, to some form of proportional representation, might compel the
fragmented forces of the Left in and outside Labour to pool their resources and mount an
electoral challenge, but New Labour has retreated on this front as well.

The changes promised have either proved stillborn, as in the case of reforming the
House of Lords, or have been delayed indefinitely. New Labour is preparing already for the
next elections. Given the debilitated state of the Conservative Party, it is very likely
that New Labour will be back in power, but with a reduced majority. Perhaps then an
opposition from the Left might emerge, even in England.

On Europe, the Blair government (until very recently) showed signs of real confusion,
giving the impression of paralysis. After an extended display of brashness in pushing the
British model for the rest of Europe, an uncharacteristic silence gripped the government
in the last three months of 1998. Public worries were expressed by Gordon Brown, the
Chancellor of the Exchequer, who was concerned that British productivity is 20 percent
below that of tax-and-spend, muddle-through France, not to speak of Germany. Both Blair
and Brown may have been told by a kindly civil servant that Britain has the lowest
proportion of sixteen-to-eighteen-year-olds in full-time education of any EU country, one
of the lowest levels of university entrance as a proportion of the age group, and ranks
tenth in the EU in the educational standards of its workforce. Britain has the highest
recorded crime rates of any EU country and the highest proportion of the population in
prison, excepting Portugal.

The victory of the German left in the 1998 elections created near-panic in Downing
Street. The crusade to bring Europe into step with Britain's low-productivity,
low-education, low-tax, low-inflation economy has been stopped. A rearguard action has
been mounted to sabotage any attempts at tax harmonization, since such a move might
attract foreign companies directly to the continent. They would no longer need to pass
Britain and collect their tax break.

The only time in recent months that Blair seemed happy in Europe was when he was
signing an agreement with the Conservative Aznar government in Spain on a joint policy for
flexible labor marketsa third way for the Spanish Right. Conveniently, Tony Giddens,
the Director of the London School of Economics, was on hand for a bit of on-the-spot
guidance for Aznar's party cadres. The Spanish paper, El Mundo, greeted the Blair-Aznar
deal with a front-page banner headline: "Aznar declares war on French and German
socialism."

New Labour's cherished British model could not survive without tax breaks for foreign
investors, degraded public services, and a docile and cheap labor force. At most, 20
percent of the population has benefited from these conditions. The fear that lies behind
New Labour's rejection of even the mild, continental variety of social democracy is not so
much Murdoch, but this crucial 20 percent, which includes, of course, the entire
membership of the Confederation of British Industry (CBI). The resignation of Oskar
Lafontaine from the German government was greeted with loud cheers in Downing Street.
Perhaps the "British model" could be resurrected. The confusion could get worse
as a referendum on the single currency gets closer. If nothing changes, the electorate
might have reason to regret that Britain was ruled by Blair in the spirit of Thatcher,
rather than someone in the tradition of John Smith and Scottish social democracy.

As far as foreign policy is concerned, all the pretensions of New Labour, as well as
Robin Cook's pledge of an ethical foreign policy, have disappeared. The Kosovo war was
simply a repeat of Britain playing second fiddle to the United Statesand with far
less dignity than even their Conservative predecessors. Tony Blair prancing about in his
shirt-sleeves, while his spin doctor, Alastair Campbell, organized the Kosovans to chant
"Tony, Tony, Tony," was one of the more grotesque footnotes to this unnecessary
tragedy. In reality, Britain has little independence. Its main function is to provide
mercenaries to buttress U.S. hegemony. This is not simply a view from the Left. In his
remarkably frank book, The Grand Chessboard, which inspired Madeleine Albright's
offensive foreign policy, Zbigniew Brezinski stresses the need to encourage European unity
even though "The brutal fact is that Western Europe, and increasingly also Central
Europe, remains largely an American protectorate, with its allied states reminiscent of
ancient vassals," and "Great Britain is not a geo-strategic player ... it is
America's key supporter, a very loyal ally, a vital military base, and a close partner in
critically important intelligence activities. Its friendship needs to be nourished, but
its policies do not call for sustained attention."

There, in a nutshell, is the grim reality of contemporary Britain. If the island ever
disappeared underneath the sea, the United States could simply replace it with a large
aircraft carrier. New Labour has tied itself with an even tougher umbilical cord to the
domestic needs of capitalism and the global needs of the U.S. military and foreign policy
establishment. Sooner or later it will pay the price.